The Return of the Deficit

Public Finance in Belgium over 2000-2010

Etienne de Callataÿ, Françoise Thys-Clément (eds)

Publication Year: 2013

An in-depth analysis of Belgium's public finance in the recent past
Prior to the outbreak of the financial crisis in 2008 Belgium's fiscal balances and debt ratios seemed to be on a firm consolidation path. Today, however, Belgium is facing a major budgetary challenge, albeit to some extent lesser than that of other European countries. A proper understanding of the current situation and the design of the most appropriate policy response always benefit from an in-depth analysis of the recent past. This book offers that closer look at the evolution of public finance in Belgium over the decade 2000-2010.
The Return of the Deficit presents a collection of original essays written by the best public finance scholars in Belgium. It covers Belgium's macroeconomic environment, its budgetary policy, changes to the tax system and social security, the evolution of public expenditure, debt management, and fiscal federalism.
This is the seventh volume in the authoritative series History of Public Finance in Belgium published under the auspices of the Belgian Institute of Public Finance. It is introduced with a foreword by Herman Van Rompuy, President of the European Council.

Title Page, Copyright

Contents

Foreword

In the 1990s, Belgium’s public finances were dominated by rigorous
consolidation which reduced the budget deficits of all government
entities from more than 8% of GDP in 1992 to virtual balance in 2000.
The primary surplus actually exceeded 6% of GDP throughout the
1998-2001 period. ...

Introduction: Belgium on the Eve of the Sovereign Debt Crisis

The decade from 2000 to 2010 in Belgium is characterised by a sharp
deterioration in the most popular performance indicator in the field of
public finance, i.e. the overall fiscal balance, which went from balance
to a 4% deficit. But there is no such thing as a key performance indicator
(KPI) when it comes to assessing fiscal policy. ...

1. The European Context. Evolving Governance in the EU: From the SGP to Hell and Back?

On 1 January 1999, at the start of the so-called Stage Three of the
Economic and Monetary Union, eleven EU Member States took the
historic step of introducing a new common currency. The creation of
the euro was as much a political decision as an economic one: ...

2. Overview. Main Developments in Public Finances

The purpose of this chapter is to give a brief overview of the main developments
in Belgian public finances during the 2000-2010 period. It does
not aim to provide detailed explanations on the subject, but to establish a
general context. It is based on the statistics presented in the annex, up to
date at the end of June 2012. ...

3. The Fiscal Stance. The Return of the Public Budget Deficit

The 2000-2010 decade got off to a most auspicious start from a budgetary
point of view. The Belgian public budget deficit had almost disappeared
at the end of the 90s and the economic outlook was optimistic
for the coming years, based on the expected dynamics of the “new
economy” technological paradigm. ...

4. Tax Revenue and Tax Policy. A Decennium of Tax Cuts

During the nineties, the tax policy stance was clearly subordinated to
the fiscal consolidation strategy of the federal government. “Maastricht”
and “3%” were the key word and figure that dominated the decennia
(Decoster, Gérard and Valenduc, 2001). ...

5. Approaches to Primary Expenditures

In this chapter different authors shed light on a particular aspect of government
expenditure or public governance in general. In one way or
another, they all address the theme of government efficiency. The contribution
by Valérie Schmitz, Bastien Scorneau and Robert Deschamps
focuses on the spending differences between regions. ...

6. Social Security. The Active Welfare State: A Stylised Retrospective

Since the mid-1990s, a vast literature has been published on the need for
a ‘new welfare state’, in which three core ideas resonate: new social risks,
social investment, and the development of services. Unemployment, old
age, ill health, sickness and disability, and the financial burden of raising
children were seen as constituting the ‘old’ risks, ...

7. Indebtedness. Interest Payment and Public Debt

Belgium’s public debt steadily fell from 1993 to 2007. Unfortunately,
the financial crisis erupted and led to an increase in the debt-to-GDP
ratio from 2008. Nowadays, both academic literature and public debt
managers pay attention not only to the public debt level but also to its
composition. ...

8. Fiscal Federalism. The Transition to a New Model of Fiscal Relations

Federalism in Belgium is an evolving process towards growing decentralisation
of responsibilities and revenue. For more than 40 years, various
institutional reforms have played an essential role in designing revenue
and responsibilities of the Regions and the Communities. ...

Conclusion

One of I.B.F.P’s (Belgian Institute of Public Finance) main missions is to
provide precise analyses of the evolution of public finances. It is on this
basis that, since after WWII, it has regularly published books on the decennial
evolution of budgetary and fiscal policies. ...

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